T-Mobile to buy, swap spectrum with Verizon

Verizon Wireless on Monday said that it has agreed to sell some wireless spectrum rights to T-Mobile USA and swap others, in a continuing quest to get regulators to approve a bigger spectrum deal it has worked out with a consortium of cable companies and another wireless carrier.

The deal with T-Mobile USA would improve the ability of both companies to offer fast wireless data services, Verizon said. T-Mobile, the fourth-largest U.S. wireless companies, is particularly starved for spectrum compared to its larger competitors, and regulators are likely to favor a deal that would improve its position.

Neither T-Mobile nor Verizon said what T-Mobile would pay Verizon for the spectrum.

The Verizon-T-Mobile deal is contingent on Verizon getting government approval for three deals to buy spectrum from cable companies and Leap Wireless for a total of about $4 billion. Those deals were struck in November and December, but have met resistance from public-interest groups who say the cellphone company, already the nation’s largest, doesn’t need more spectrum and shouldn’t be cozying up to competitors such as the cable companies.

T-Mobile had also opposed the Verizon-cable deals, saying they would place an “excessive concentration” of spectrum in Verizon’s hands. Verizon is the largest cellphone company in the country, and has a relatively strong spectrum position already.

Harold Feld, senior vice president at public-interest group Public Knowledge, said Verizon is trying to “buy off” T-Mobile.

“The true danger lies not only in the concentration of spectrum in the hands of the leading wireless provider, but with the cozy, cartel-like arrangements between Verizon, Comcast, and the other (cable companies) party to the deal,” Feld said.

Cellphone companies need spectrum rights, or slots on the airwaves, to do business much like radio stations do. With the growth of wireless data use, cellphone companies have a newfound need for more spectrum. The amount of spectrum they have available in any area determines the maximum download speeds they can offer.

To get the deals with the cable companies and Leap cleared, Verizon has already offered to auction other airwaves it isn’t using.

T-Mobile, which is a unit of Deutsche Telekom AG of Germany, said the Verizon deal encompasses spectrum in 218 areas, and would improve its spectrum position in 15 of the top 25 markets in the U.S., notably Philadelphia, Washington, Detroit and Seattle.

T-Mobile hopes to put the spectrum to use as early as next year, if the Federal Communications Commission approves the deal this summer.

“This is good for T-Mobile and good for consumers because it will enable T-Mobile to compete even more vigorously with other wireless carriers,” T-Mobile USA CEO Philipp Humm said, in a statement.

Verizon Wireless is a joint venture of Verizon Communications Inc. of New York and Vodafone Group PLC of Britain.